MTO, MTS & ATO: Challenges & Opportunities

In the manufacturing area, organizations have always been facing difficulties to manage their activity depending on their business model.

  • Excess inventory
  • Service level under expectations
  • Excessive supply chain costs
  • Quality issues

But today, because of the economical context, these pain points have become so critical, that solutions need to be found to manage them efficiently.  And these solutions differ but sometimes overlap depending on whether we are in a Make to Order environment, a Make to Stock environment, and / or an Assemble to Order environment.

In fact today, manufacturers need much more visibility, reactivity and security.

Forecasting is key to plan future activity.  And depending on the business model, these forecasts can be made at different levels: the final product level(Make to Stock), or the component level (Assemble to Order).

And as more and more stakeholders are involved in the planning process throughout the extended organization, collaboration is mandatory to share information to make consensual decisions.

Reactivity in the end to end process is critical as well, especially in a Make to Order environment.  When a customer order is placed, the factories and suppliers need to be prepared to provide the product within the lead time.  This requirement is also important when assembling to order.  The components have to be available and the team needs to be ready to assemble.

Finally, security is important to manage product variability.  A forecast is never 100% accurate, so to secure the business, safety stock is sometimes required.  New technologies allow calculating a safety stock based on a number of settings including forecast accuracy, and thanks to the recent DDMRP process, buffers can be placed throughout the supply chain to allow smooth planning.

We are in a world where change is a daily concern and adaptability a key competency.  Today, thanks to the digital transformation,solutions exist to meet these challenges, and to help organizations build the future of their supply chain.